Meeting the legal requirement
To certify as a B Corp, you will be required to make a commitment to consider your company’s impact on its stakeholders, now and in the future, by building it into your legal structure. Find out more about the legal requirement.
What is the B Corp legal requirement?
The B Corp legal requirement formalises your company’s alignment with the B Corp Movement’s values and embeds a stakeholder-focused mindset that separates B Corps from other businesses.
The B Corp legal requirement is designed to:
- Provide a legal basis to allow directors to consider the interests of all stakeholders, not just shareholders, when making important decisions
- Protect the company’s mission and values through capital raises and leadership changes, and give business leaders more flexibility when evaluating sale and liquidity options
Is it a requirement of every business looking to certify as a B Corp?
Yes. The B Corp legal requirement is a fundamental element of certification.
All companies seeking to become a B Corp must meet the B Corp legal requirement and update their Articles of Association to include mission-aligned legal language.
Making the legal change prior to certification is required for all companies with 0-49 full time employees. For businesses with more than 50 employees, additional time is granted depending on the company’s legal structure – limited companies will have up to a year after certification to complete the legal change, and Limited Liability Partnerships (LLPs) will have 90 days.
A company is awarded Mission Lock points on the B Impact Assessment for making the legal change. To earn the full 7.5 or 10 points available on this question, the legal requirement must be completed during the B Corp Certification process. If a company makes the legal change after certification is granted, it'll be awarded 2.5 points.
How do I meet the legal requirement?
(See below for a 5 step guide)
If you are a limited company, you will need to amend your Articles of Association to include the specific B Corp legal requirement wording, which should be adopted verbatim. This legally commits you to use business as a force for good, by:
- Creating a material positive impact on society and the environment through your business and operations
- Considering ‘stakeholder interests’ – including your shareholders, employees, suppliers, society and the environment
Once amended, your company’s constitutional documents will be filed with Companies House.
The relevant wording for Limited Companies, Companies Limited by Guarantee (CLGs), Limited Liability Partnerships (LLPs) and Community Interest Companies (CICs) can be found here.
Making the legal requirement - in 5 steps
Helping you gain a high-level understanding of the procedure for your company for making the B Corp legal change.
- The Board of Directors reviews legal requirement. The company considers how the legal requirement fits with current constitutional documents (including shareholders agreement, if any) and board members discuss the process and timetable for amendments to be made.
- Internal stakeholders engaged. The Board of Directors circulate the legal requirement language to internal stakeholders e.g. shareholders/members, legal counsel, audit committee, investment committee, risk committee - for review and feedback (possibly through an internal B Corp champion).
- The board approves legal change. Legal requirement language is approved at a meeting of the Board of Directors, which resolves to convene a shareholders’ general meeting or propose a written resolution.
- Shareholder/member special resolution to approve amendment to articles. Subject to any further requirements in the Articles of Association, a special resolution passed by at least a 75% shareholder majority is required to approve amendments to the constitution. Either passed by way of a written resolution (for private companies) or a resolution at general meeting.
- File documentation with Companies House. Documents to be filed with Companies House include Form CC04, amended Articles of Association and a copy of the special resolution. Follow this link to file documents with Companies House - https://www.gov.uk/file-changes-to-a-company-with-companies-house. Documents must be filed with Companies House within 15 days of passing shareholders’ resolution.
NB This guide is illustrated for a limited company, so each organisation should consider the requirements specific to its legal form, in determining its process for making a constitutional amendment. Organisations may want to consider seeking legal advice to assist with this process.
Further resources
To meet the legal requirement, companies must adopt specific wording that is supplied by B Lab. Find the correct wording for your company structure here.
Download a guide to embracing stakeholder governance.
The legal requirement will differ across countries. To find out more about the legal requirement outside of the UK, visit our global site and use our Legal Requirement tool.
